Mongolia Deliberates Major Tax Revamp

Under the leadership and coordination of the Ministry of Finance, consultations on the Ministry’s proposed tax amendments started on March 5. The first session was held with business sector representatives regarding tax law reforms and amendments at the Mongolian National Chamber of Commerce and Industry.

Ministry of Finance is conducting a public discussion on revising 24 tax-related laws, including General Taxation Law of Mongolia, Laws on Corporate Tax, Personal Income Tax and Value Added Tax, in order to hear voices of taxpayers and collect best proposals from the relevant parties. The Government noted that no fundamental changes and revisions were made to tax laws in the last decade and the taxation law ‘package’ was created to improve tax environment and decrease some taxes. The taxpayers expect favorable environment from this tax reform.

According to the proposed tax law amendment, if the annual revenue of enterprises operating in Mongolia is lower than MNT 1.5 billion, the government will return 90 percent of paid taxes. Furthermore, small and medium sized enterprises which have MNT 50 million of annual revenue, will be able to pay only one percent tax from sale revenue. The proposed amendments would also reduce the number of reports required from SMEs. Companies with an annual income of over three billion MNT would be required to issue tax reports four times a year, and those with less than three billion MNT in annual income would be required to file reports twice per year. The amendments include major changes to the VAT law.

The proposed amendments expect to be discussed and voted on during the spring parliamentary session and, if approved, will come into force on  January 1, 2019.

Switzerland Aids Mongolian Small-Scale Artisanal Mining

The Sustainable Artisanal Mining (SAM) Project started in 2005 and built on Swiss Agency for Development and Cooperation’s (SDC) experience in Artisanal and small-scale mining (ASM) projects in Ecuador, Bolivia, and Peru. Since 2005, the SAM Project has been contributing to the organization and formalization of Mongolian ASM sector, advocating for environmentally sound mining practices and raising awareness amongst stakeholders on responsible ASM. The SAM Project has been implemented in four Phases, so far, with goals and aims to develop an economically sustainable, environmentally responsible and human rights-based ASM sector in Mongolia benefiting from and contributing to, global best practice regarding ASM. Phase 1 of the SAM Project aimed to develop ASM as a motor for sustainable rural development under an integrated sustainable resource management by the Government of Mongolia. Goal of Phase 2 was to support ASM to create favorable conditions and structures for the ASM sector so that its contributions to socio-economic development based on the careful use of natural resources in selected areas will increase. Phase 3 secured the recognition of ASM as a formal sub-sector contributing to Mongolia’s economic development. Phase 4 of the SAM Project seeks to transform Mongolia into an international knowledge hub for ASM best practice. In Phase 4 of the SAM Project, SDC initiated and funded the development of ASM Knowledge Hub, a web-based platform, opening ceremony for which was held on March 1, 2018. The ASM Knowledge Hub is a web-based interactive platform, which will provide active exchange and distribution of ASM information and connect ASM actors and knowledge contributors in Mongolia as well as with global ASM stakeholders. The platform features latest news and updates in ASM sector and provides information on upcoming events regarding the sector. Visit ASM Knowledge Hub at for various articles, studies, researches and publications produced by ASM stakeholders.

What You Need to Know About Registration of Foreign Pharmaceuticals in Mongolia

Pharmaceuticals imported to be sold within Mongolia are required to be registered with the Ministry of Health prior to import. The law provides for an “Express” registration process, as well as a “Regular” track. Express registration includes a sub-track “A” and “B”.

To be eligible for Track A Express registration, a pharmaceutical product must already have approval from a national regulator from a country recognized internationally as having effective pharmaceutical review and control processes, and must be sold on the market in that country. Such recognized bodies include the FDA in the USA, The European Medicines Agency (EMA), European Free Trade Association (EFTA) and the Ministry of Health, Labour, and Welfare in Japan. Track A Express registration provides for formal registration of the product within 30 days of the filing of the application for registration.

Track B Express registration provides for formal registration within 60 days of the filing of the application for pharmaceuticals which have been previously approved by relevant authorities of states which are party to Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme–PIC/S.

If a pharmaceutical product does not meet the requirements for Express Track A or B, it will be required to proceed with a regular registration process. The regular approval process will take 3-5 months, however this time may be extended if required.

Applications for pharmaceutical approvals in Mongolia are submitted to the “Human Medicine Board” which will make a decision as to registration of the pharmaceutical for sale within Mongolia. Products approved under the Express process are granted approval for 3 years, while products registered via regular process will receive approval valid for 5 years, after which the registration is required to be renewed.

If you are seeking to import a medicine product to Mongolia, our Mongolian lawyers are able to assist with all required registration actions.

Time Running Out for Mongolians to Claim Free Land Entitlement

According to Mongolian law, each Mongolian citizen is legally entitled to own a plot of land. Plot size allotted will be depending on the location, which a smaller plot available in Ulaanbaatar, and a larger plot (up to .05 hectares) available in more rural areas This ownership entitlement is a one-time opportunity granted by “The Law on Allocation of Land to Mongolian Citizens for Ownership”. But the opportunity is not forever and the period to apply for a free grant of land in accordance with the law expires on May 1st this year.

As the deadline is fast approaching, our Mongolian lawyers would like to offer some tips on the application process to Mongolian citizens who have not yet taken advantage of the land grant.

Firstly, citizens applying for the land grant must submit applications materials to the local governor or land development office. The Application requirements as set out by law require applicants to submit the following documentation and materials.

Citizens need to submit their application to the relevant local Governor or land department to acquire land for ownership for the purpose of family needs.

  • notarized copies of birth certificates of family members who have not reached 16 years of age
  • letter of confirmation by a Governor of khoroo or bag on the status of the family and number of its members;
  • if land is possessed according to Law on Land, then copies of the land certificate to possess land or notarized copy of the land possession contract;
  • an outlining map showing location and size of the land requested (if the land is to be owned on a shared basis among a group then an outlining map of every parcel belonging to each owner showing its size, location and boundary).

The local governor will review the application documentation and resolve the application within a period of 3 months from receiving the application. Usually the land is granted unless there are irregularities in the documentation. The land grant issued by the governor will indicate the plot’s location, boundaries, purpose, full name of the new owner, the owner’s identification number and birth certificate number for those who have not yet reached 16 years of age.

Based on the decision of Governor, the local Immovable Property Registration Office will register the land ownership status and will issue a registration certificate for immovable property reflecting ownership.

Expat Visa and Work Permits in Mongolia: Part III

We continue our guide to Mongolia visa and work permits. In this article we shall cover work permit visas (HG visa). (Don’t forget to also check out Part I and Part II)

Work permit visas (HG visa) are issued to foreign citizens, who work in Mongolia under labor contract. HG visas are valid for up to 1 year, depending on employer’s request. Holders of these visas are required to obtain residence card from Immigration Agency and work permit from Labor and Welfare General Agency.

There are several key considerations that employer should be aware of. A key influence is that a foreign employee quota is set by the Government of Mongolia every year for local and foreign companies in Mongolia. This usually ranges from 5% to 80% depending on the sector in question. Generally, however, the default quota for companies is 5%. Another key condition is that employer must pay a workplace fee. Employer must pay on monthly basis a workplace fee, equal to twice the minimum wage set by the Government, for every foreign employee they hired.

So, if you, an employer, have decided to hire a foreign employee then as usual you must first provide a visa invitation letter for your foreign employee. Firstly, employer must obtain a work permit letter from Labor and Welfare General Agency at least one month prior to employee’s arrival to Mongolia. Thereafter a request must be submitted along with required packet of documents (including a work permit letter) to the Immigration Agency. Once Immigration Agency permits to issue a visa, then a visa invitation letter must be forwarded to the embassy or consulate in foreign employee’s country of residence, where he/she applies for HG visa. HG visas are valid for 183 days upon their issuance until the entry into Mongolia.

Upon arrival of foreign employee to Mongolia, employer must register him/her with the Immigration Agency within 7 days, obtain a residence card within 21 days and obtain work permit within 10 business days.

If necessary employer may apply for a single exit-entry, two-time exit-entry or multiple exit-entry visas (valid for either six months or one year) depending on employee’s or employer’s needs. HG visas may be renewed.

Also, there are other visa options for those who seek to engage in other types of activities, such as employment in NGOs, religious organizations and other. Therefore, companies inviting foreigners should carefully choose what visa suit their purpose before applying for visa.

Expat Visa and Work Permits in Mongolia: Part II

Continuing our guide to Mongolia visa and work permits, in this article we shall cover foreign investor visas (T visa).

Foreign investor visas (T visa) are issued to individuals, who are foreign investors or chief executive officers of a foreign invested company, or its branch or representative offices. These are valid for either 6 months or 1 year. Unlike multiple-entry B visas, holders of T visas are required to obtain residence permit (residence card) and therefore may stay the full period of their visa.

Like B visas, company inviting a foreign investor (or chief executive officer) must first provide a visa invitation letter. A request must be submitted along with required packet of documents (including a foreign investor card previously obtained from General authority for intellectual property and state registration) to the Immigration Agency. Once Immigration Agency permits to issue a visa, then a visa invitation letter must be forwarded to the embassy or consulate in foreign investor’s country of residence, where he/she applies for T visa. T visas are valid for 183 days upon their issuance until the entry into Mongolia.

Inviting company must register the investor with the Immigration Agency within 7 days and obtain a residence card for the investor within 21 days upon their entry into Mongolia.

In case of need, inviting company may apply for a single exit-entry, two-time exit-entry and multiple exit-entry visas (valid for either 6 months or 1 year) during investor’s stay in Mongolia. T visas may be renewed.

Expat Visa and Work Permits in Mongolia

The Mongolian Government is known for generally enforcing a fairly flexible investment policy, with foreign investment well received in all sectors of the economy. So Many entrepreneurs seek partnership with foreign investors. Also, as there remains a notable shortage of skilled labor in Mongolia, foreign workers are therefore encouraged to fill these gaps. For entrepreneurs and companies considering inviting foreign investors/partners or employees to Mongolia, we will provide you a brief guide to Mongolia visa and work permits in several parts.

In this case there are three visa options available: business visa (B visa), foreign investor visa (T visa) and work permit visa (HG visa).

There are single-entry and multiple-entry B visas. Single-entry B visas are valid for a period of up to 90 days, and multiple-entry B visas are valid for either 6 months or 1 year. However, inviting company should take note that with multiple-entry B visas one time stay of a visitor should not exceed 30 days upon entry into Mongolia. In other words, visitor may enter Mongolia multiple times within the period of issued visa, but every stay may not exceed 30 days. Whereas visitors with single-entry B visa may enter Mongolia one time only and stay for a period of up to 90 days (depending on issued visa). B visa holders cannot legally work while in Mongolia – they may attend business meetings, conferences, exhibitions and other similar events. B visas may be sponsored only by a company duly registered in Mongolia. Therefore, B visas are generally intended for potential or current business partners and investors visiting Mongolia.

Company inviting a foreign partner or investor must first provide a visa invitation letter to such partner or investor. A request must be submitted along with required packet of documents to the Immigration Agency. Once Immigration Agency permits to issue a visa, then a visa invitation letter must be forwarded to the embassy or consulate in foreign partner’s or investor’s country of residence, where he/she applies for B visa. Single-entry B visas are valid for 90 days upon its issuance until the entry into Mongolia, and multiple-entry B visas are valid for 183 days.

Inviting company is responsible for registering the visitor with the Immigration Agency within 7 days upon their entry into Mongolia.

Mongolia Set to revise Labor Law

A recent meeting of the Cabinet reviewed and discussed a proposed draft of amendments to the Labor Law. It was decided by the Cabinet that the proposed amendments will be submitted to Parliament to be formalized in law, along with the addition of some proposals from Cabinet members.

The Labor Law was ratified in 1999 and has been amended several times since. The law governs employment relationships within Mongolia. The Law and sets standards as to health and safety requirements, minimum wage levels, maximum hours of work, collective employment agreements and bargaining and resolution of employment disputes. The law prohibits employment discrimination on the grounds of social or property status, race, color or nationality, sex, religion or political views as well as unwritten contracts of employment.

The latest changes introduced via the Amendment Law on 21 April, 2017 provide detailed regulations regarding previously unclear provisions of the Labour Law, such as probationary periods, internship/apprenticeship periods, and part-time employment. The amendment also increased the level of fines for violations of the Labour Law by employers, in order to ensure the protection of employees’ basic rights.

The working group which drafted the current proposed amendments believe that a number of the law’s articles are outdated and don’t meet the needs of the modern labor environment. The newly proposed amendments seek to cover relations between employers and employees, clarifying rights and obligations. The amendments also include articles that would place restrictions on the employment of minors, workplace discrimination, establishing employment agreements without time constraints for permanent employment, part-time employment regulations, remote working regulations, basing salaries on skills and abilities, annual vacation requirements, and new regulations for vacation days for mining sector employees who work far from home for extended periods.

Lehmanlaw Mongolia LLP will be update further progress of the amendments to the Law on Labour in timely.

Mongolia Introduces Investment Protection Council

We would like to introduce the Investment Protection Council (IPC), one of the effective way to protect rights and interest of the investors and to resolve the disputes involving the foreign investors in Mongolia.

The Investor Protection Council needs to be established in concern with the facilitation of investment related dispute settlement and of favorable environment for the sustainable operation of investors. The Investor Protection Council is established based on an ordinance of the Prime Minister of Mongolia in Dec 2016. That council is composed of Chairman, 16 members, and Secretary. The main formation of the Council’s operation structure should be Council’s session. The decision will be made by majority of the Council members during the session.

The IPC’s Main Roles:

  • Preview and make preliminary prognosis on foreign investment related issues that will be discussed by Cabinet Session
  • Improve investment legal framework, remove duplications and breaches of laws, introduce investment related proposal that made by relevant organizations to Cabinet.
  • Make proposals on implementation of laws and resolutions related to investment, and introduce it to Cabinet. The council should be supernumerary and the Council’s operation should be permanent.

In addition above, one of the main roles of IPC is to protect investors’ right, and solve their grievance (except the cases examined under court or arbitrage). So far 83 compliant and claims submitted by investors to this Council’s Secretariat. As we have been classifying these complaint and claims, there are 40% of them was related to mining, 20% for road, transportation, construction, manufacturing, 10% for information, communication, space technology, 10% for bank, finance, tax, 5% for land, land proprietorship, utilization, 5% for national development, planning, and remaining percentage was claims related to fair competition, as well as supervision, pressure and burden, registration, and authorization activities of the law enforcement agencies.

For example, in relation to the dispute related to the termination of the license of Mobicom Corporation with 100% – a business entity 100% owned by Japan, by the Communications Regulatory Authority, it was further discussed at the Investor Protection Council Meeting and it supported to resolve the investor’s claim. In doing so, KDDI, the Japanese investor, will make additional investments to expand Mobicom’s operations, which indeed has not been resolved over the past 10 years.

LehmanLaw Mongolia LLP suggests our clients this amicable mechanism to resolve the disputes involving them in Mongolia.

Using Customs Seizure to Stop Import of Infringing Products to Mongolia

Our firm’s Mongolian intellectual property lawyers have seen a lot of inquires in recent months from clients seeking assistance regarding counterfeit products which were being sold in Mongolia.

There are several mechanisms our Mongolian lawyers recommend to deal with counterfeit products in Mongolia.  One of the most important of these is utilizing Customs to restrict entry of counterfeit products or goods infringing registered trademarks from entering Mongolia.

This works by seizing infringing goods at Customs upon attempted entry into Mongolia. Before this may be done, the authentic goods bearing a validly registered Mongolian Trademark must be registered with Customs.

This registration process is relatively easy, requiring documentation of the registered trademarks, basic information regarding the trademark owner, a description of the products, and a list of items requested to be reviewed and protected by Customs. Our Mongolian lawyers will walk you through the process. The review procedure will talk approximately 30 days from the date of submission of the application, after which, the registered information will be forwarded to Customs entry points around Mongolia.

A written request for seizure of infringing goods, must be submitted along with a small cash deposit or bank guarantee. The customs office prefers having the deposit to avoid incurring any damages to importer before starting examination of infringing goods based on the original goods with customs registration.

Our Mongolian lawyers and clients have found such Customs seizures to be effective at blocking incoming shipments of infringing products. However it is important to note the applicant seeking to block the shipments must have a valid, registered Mongolian trademark in order to support such action by Customs.